Tag Archives: Hospital

13 healthcare M&A deals that made headlines in 2017

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

https://www.fiercehealthcare.com/finance/healthcare-mergers-and-acquisitions-hospitals-payers-year-review?mkt_tok=eyJpIjoiTnpreE9HSTFPVFJqWldZMSIsInQiOiJNM0NTa1ZBZW1kU001bkx4SEcwNmtSeEFVNG9oZnpUbEF2UVpMY1lDUWNZYm8zZTFuejJNUGpPOTJuYVlXTlZwWHdXU1hrRm50Z1NFbHJGRjdUMld6U1JoYWo0enNaUlEzNldab2tcL3hxV3NPaTBlK2xKbmVSQmgwMTE2NFZpYzgifQ%3D%3D&mrkid=959610

handshake

Analysts rightly predicted that 2016 would be a big year for healthcare industry mergers, but 2017 is on pace to top it, with a number of blockbuster mergers between big-name health systems headlining the year in M&A.

Kaufman Hall reported that 87 hospital mergers had been recorded through the third quarter of 2017, compared to 102 overall in 2016. By that point, eight transactions had included hospitals with $1 billion or more in revenue, twice as many big-ticket mergers as in all 2016.

“These transactions are driven primarily by strategic imperative and less so by financial drivers,” said Anu Singh, managing director of Kaufman Hall.

M&A activity wasn’t restricted to hospitals and health systems, as a number of deals in the payer sphere could also significantly impact the industry.

However, though the industry’s merger mania continued throughout 2017, a number of major deals were abandoned or put on hold, as the Federal Trade Commission continued to keep a close eye on merger activity.

Here’s a recap of some of the biggest healthcare industry mergers that were announced last year:

Aetna and Humana

These two payer giants announced merger plans in 2015 but abandoned the deal in February after a judge blocked it on antitrust grounds.

The Department of Justice and several states sued to block the merger in the summer of 2016, and a judge ruled that merger would unlawfully weaken competition in the Medicare Advantage market.

Anthem and Cigna

If Aetna and Humana parted ways on what one might consider good terms, the same was not true for Anthem and Cigna. This insurance megamerger was also blocked by a federal judge on antitrust grounds, but what followed was a protracted legal dispute between Anthem and Cigna over ending the deal. Anthem finally agreed to end the deal in May after a judge ruled Cigna was free to walk away.

NorthShore University HealthSystem and Advocate Health Care

A potential deal between NorthShore and Advocate was first announced in 2014, but a federal judge blocked it in early March. The two Illinois systems then agreed to abandon the merger in response.

PinnacleHealth and UPMC

PinnacleHealth revealed in March that it would merge with UPMC, the largest integrated health system in Pennsylvania, and would acquire four new hospitals in an effort to expand its reach in the central part of the state. Pinnacle previously pursued a merger with Penn State Hershey.

Partners HealthCare and Care New England Health System

Care New England had been aligned with Partners since 2009, but Partners announced in April that it would acquire the system, which is the second largest in Rhode Island.

Steward Health Care System and IASIS Healthcare LLC

Steward’s purchase of IASIS, which was finalized in October after being announced in May, established the system as the largest private hospital operator in the U.S. With the purchase, Steward now operates 36 hospitals across 10 states and is projected to have revenue in excess of $8 billion in 2018.

Ascension and Presence Health

Ascension, the largest Catholic health system in the U.S., announced plans to purchase Illinois’ largest Catholic system, Presence Health.

If the deal is finalized, Presence will operate under Ascension’s AMITA Health venture.

UNC Health Care and Carolinas HealthCare System

A final deal between UNC and Carolinas would create one of the largest nonprofit health systems in the U.S. The two providers said the alignment would increase rural access to healthcare, allow each to negotiate better with payers and potentially save millions of dollars in healthcare costs.

Centene and Fidelis Care

Centene spent much of 2017 expanding its reach in the Affordable Care Act’s marketplaces, but it announced in September that it would acquire New York-based Fidelis Care for $3.75 billion. Centene said purchasing the 1.6 million-member insurer would benefit shareholders and allow it to continue to reach underserved areas.

CVS and Aetna

Though Aetna’s merger with Humana failed earlier in 2017, it was snapped up later in the year by pharmacy giant CVS in a deal worth $69 billion.

The purchase had been rumored since October and could impact hospitals or health systems that operate urgent clinics, as gaining Aetna’s 22 million members would be a significant boon to CVS’ MinuteClinics.

Dignity Health and Catholic Health Initiatives

These two massive Catholic systems signed a deal to create a new nonprofit system, the name of which has yet to be announced. The merger would unite 139 hospitals and 700 care sites across 28 states under the same umbrella. Dignity and CHI had a combined $28.4 billion in revenue in 2017.

Providence St. Joseph Health and Ascension

A deal between these two systems has not officially been announced, but sources told The Wall Street Journal that Providence and Ascension were deep in merger talks. If these two systems were to align, it would create the largest hospital operator in the U.S., with 191 hospitals across 27 states and a combined annual revenue of $44.8 billion.

Humana and Kindred Healthcare

Following its failed merger with Aetna, Humana seemed a ripe target for acquisition by another insurer. Instead, it was revealed in mid-December that it, alongside two private equity firms, would purchase Kindred in a deal worth $4.1 billion. The Kindred deal won’t kill talk that Humana could be acquired, however.

 

Want to cut health-care costs? Start with the obscene amount of waste.

Posted on by • Posted in Uncategorized • Tagged , , , , , , , • Leave a comment

https://www.washingtonpost.com/news/posteverything/wp/2017/12/28/want-to-cut-health-care-costs-start-with-the-obscene-amount-of-waste/?utm_term=.3f6be0923b4a

 

A year of investigating revealed a staggering amount of supplies and drugs are simply thrown away.

In Maine, there’s a warehouse the size of a middle school gymnasium, stuffed with brand-new medical supplies and gently used medical equipment. Several pallets are piled with boxes of surgical sutures, still in their shrink wrap, each box worth hundreds of dollars. Tubs overflow with diabetes supplies and surgical instruments that may run hundreds of dollars apiece. There are bins of bandages and gauze and saline and ostomy bags and every other medical supply you can imagine. These materials, unexpired, could easily stock any hospital or clinic. But each item has actually been thrown away by a local medical facility.

The cost of health care has been rising for decades, and Americans are paying the price. In a recent Gallup poll, people cited the high cost of care as their No. 1 financial concern. It’s an enormous problem, and trying to solve it all at once brings on panic and paralysis. But after reporting for a year on the ways the medical industry blows through our money, I have one idea: Let’s end the egregious waste that’s draining our health-care system.

The National Academy of Medicine has estimated the health-care system wastes around $765 billion a year — about a quarter of what we spend. Eliminating all the waste could allow us to insure 150 million Americans, the Academy of Medicine said, and saving half of it could provide groceries for every household in the country for a year. Eliminating the waste would also stop our rising health-care costs from eating up our wage increases. My premiums go up 9 percent next year. Same thing happened last year. Odds are your costs are rising, too.

It’s hard to downplay what I found when I began investigating the issue. Hospitals throw out so many valuable supplies that a cottage industry of charities has sprung up to collect this stuff and ship it to the developing world — otherwise, all those goods in that Maine warehouse would be headed for a landfill.

Nobody tracks how much hospitals waste rather than donate, and I couldn’t track down where each item came from. But experts told me when hospitals change vendors for a type of supply, they often toss the old stuff. Or, if they take over a clinic or facility, they get rid of the items that come with it, even if they are unused and unexpired.

The operating room is a major source of wasted spending. One hospital tracked the value of unused items that went to waste during neurosurgery procedures in a single year. The total: $2.9 million — for one type of surgery at just one hospital. In that case, the surgeons hadn’t updated their system of telling the staff which supplies to prep for each operation. They were opening many items they didn’t need, which then had to be thrown away even though they were unused. The hospital updated its approach to make sure they aren’t setting up for operations with excess supplies.

I learned that nursing homes throw away hundreds of millions of dollars’ worth of valuable medication every year. They typically dispense drugs a month at a time for patients, and often have them discontinued if the patient dies or transfers. The excess drugs get trashed, incinerated or even flushed down the toilets, contaminating our water supply. The chief executive of a pharmacy that serves nursing homes in Florida told me that his company alone throws away about $2.5 million a year in valuable medication.

In Iowa, the state government funded a program to recover these castoff nursing home meds and donate them to needy patients, for free. This year, they’re on pace to recover and redistribute $6 million in medication. My story led policymakers in Florida and New Hampshire to introduce legislation to try to replicate the Iowa program.

Drugs are a huge source of waste, partly because drug expiration dates don’t mean what we think they mean. The Food and Drug Administration makes pharmaceutical companies show their medication is safe and effective until its expiration date. It doesn’t make them find out how long they actually last.

Studies show it’s common for a drug to be safe after its expiration date. The FDA runs a program that tests and then extends expiration dates on drugs in the federal government’s stockpiles. Those same drugs get thrown away in pharmacies when they “expire,” even though many of them are in short supply. How much of our money does it waste? One midsize hospital in Boston throws away about $200,000 worth of drugs a year that hit their expiration date. If that’s true for other hospitals, the total would be about $800 million a year for hospital pharmacies alone.

Meanwhile, drug companies are making eyedrops two or three times larger than what the eye can even contain. We are paying for the wasted medicine running down our cheeks. I spoke to the former head of research for Alcon Laboratories, a global leader in the eye care industry now owned by Novartis. He told me that in the early 1990s his team created a “microdrop” that eliminated the waste. The microdrops were effective and reduced the burning caused by larger drops. But Alcon’s leaders killed the project because they were worried it could reduce sales.

Vials of cancer drugs are also made too large, which one study said wastes about $1.8 billion a year in the valuable medication. Earlier this year, one drug company switched from a multiuse vial, which could be shared by patients, to a single-use vial that could not be shared, thereby increasing the amount of wasted cancer medication. The change would make the supply chain more reliable worldwide, the company said. But one cancer center calculated that the change would cost each patient an average of $1,000 in waste per infusion. Imagine: You’re fighting cancer and then get billed an extra thousand dollars for medication they toss in the trash. Two U.S. senators responded to my story by introducing legislation to solve the problem of oversized eyedrops and cancer drug vials.

These are not isolated examples or small sums being squandered. Let’s say my reporting identified about $10 billion in wasted spending. That’s a rough estimate because no one is actually tracking how much we’re wasting. What else could we be doing with that money? The Kaiser Family Foundation says it costs an average of $6,690 to pay one person’s insurance premium in 2017. At that rate, the $10 billion saved could insure about 1.5 million people for a year. Tell those people it isn’t important to reduce our wasted health-care spending.

The Academy of Medicine did something smart when it reframed our health-care overspending as waste. We may be a wasteful country, but we still teach our kids to eat everything on their plates. “Waste not, want not,” is baked into our cultural DNA. It’s a powerful concept because it’s a moral one. It’s wrong to squander the hard-earned dollars Americans are paying into the health-care system and then demand they pay more.

We can’t be naive and think it will be easy to fix this problem. Our wasted spending represents revenue and profit for the medical industry. But our health-care spending should not be an entitlement program for the medical industrial complex. I put together a prescription for reducing the wasted spending I identified. Our policymakers should stand up to the medical industry and stamp out the waste.

 

The uninsured are overusing emergency rooms — and other health-care myths

Posted on by • Posted in Uncategorized • Tagged , , , , , , , • Leave a comment

https://www.washingtonpost.com/news/wonk/wp/2017/12/27/the-uninsured-are-overusing-emergency-rooms-and-other-health-care-myths/?utm_term=.98d00c3511a6

In the search for ways to bring down American health-care spending, there are certain ideas that are close to dogma. Chief among them: If you provide health insurance to people, they will stop overusing the emergency room.

“A lot of people just didn’t bother getting health insurance at all. And when they got sick, they’d have to go to the emergency room,” President Obama said in a 2016 speech. “But the emergency room is the most expensive place to get care. And because you weren’t insured, the hospital would have to give you the care free, and they would have to then make up for those costs by charging everybody else more money.”

The idea that uninsured people are clogging emergency rooms looks more and more like a myth, according to a recent study published in Health Affairs. Uninsured adults used the emergency room at very similar rates to people with insurance — and much less than people on Medicaid. Providing insurance to people can have many benefits, but driving down emergency room utilization doesn’t appear to be one of them.

 

10 things for healthcare executives to note as they head into 2018

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , , , , , , • Leave a comment

https://www.beckershospitalreview.com/hospital-management-administration/2017-the-year-that-was-10-things-for-healthcare-executives-to-note-as-they-head-into-2018.html

Disruption got real. Hospital-insurer negotiations heated up. Activist shareholders shook up legacy hospital operators. Healthcare and the government failed to effectively communicate. These and six other trends that shaped the year in healthcare — and the lessons executives can take from them into 2018.

1. Disruption got real. After years of speculation about who or what would become the “Uber of healthcare,” the tectonic plates of the industry shifted substantially in the past year — and there’s reason to believe this will only continue in 2018. A number of mergers illustrate the blurring line between healthcare and other industries, such as retail and insurance. Consider the combinations of CVS and Aetna or Optum and DaVita and Surgical Care Affiliates. As for what’s to come, Apple and Amazon have both shown interest in expanding their healthcare footprint. In fact, just last month, we reported Amazon was in talks to move into the EHR space.

Executive’s takeaway: Executives grew skeptical of the term ‘disruptor’ when it was used as generously as it was circa 2011-2016. But now disruption is actually unfolding at a rapid clip, and executives are paying close attention to who/what poses the greatest threat to their business models.

2. Hospital-insurer negotiations heated up. Previously, a health system and a commercial insurer occasionally hit a snag in the contract negotiation process, resulting in a dispute palpable enough to consumers that it warranted headlines. These impasses generally lasted a matter of weeks before outside pressure drove the parties to compromise. The nature of these conflicts has since changed. This past year brought regular coverage of strained provider-payer talks. In fact, we now do a weekly compilation of payer-provider disputes and resolutions to stay abreast of these conflicts as they occur and subside. In 2017, we saw lawmakers intervene in payer-provider disputes, a health system executive’s meant-to-be-private email about an insurance company go public, and a children’s hospital go out of network with a commercial insurer — affecting 10,000 kids.

Executive’s takeaway: Health system executives are growing increasingly vocal with their thoughts about commercial insurers. In the past, executives took great lengths to observe discretion in these relationships. Now the gloves are off — or at least one is. We’re sure we haven’t seen the worst of a payer-provider dispute yet, but the number we see on a weekly basis, and their tone, indicates that disputes are both more frequent and more serious than in years past.

3. Investments in value-based care, once a somewhat safe bet, became debatable. In a final rule issued in November, CMS officially canceled the hip fracture and cardiac bundled payment programs and rolled back some mandatory requirements in the Comprehensive Care for Joint Replacement Model. This will continue to have a ripple effect on payers, providers and health system strategy. For hospitals and health systems that made significant investments to support excellence under the program, this news is difficult to take — especially since no investment is made lightly amid thin margins. Although CMS says it is still committed to value-based care as a concept, the mandatory nature of the bundles program acted as a pedal-to-the-metal force that made hospitals act. Since commercial payers follow Medicare, the fate of the program will likely influence the adoption of bundles among private insurers, too. 

Executive’s takeaway: Most all executives tell us they want to be on the leading edge, not bleeding edge, of value-based care. Without a “do it or lose it” approach to bundles, the industry lost a major impetus toward value-based care, in which many health systems and physicians would take the plunge together. Providers have never had a clearly paved path for their “journey toward value-based care.” At best, it was a dirt trail. Now it could be compared to a dirt trail covered in snow. This leaves executives questioning the value of their current and future investments in value-based care.

4. Big systems want bigger. Just when you thought you had a handle on what a “big” health system looked like in the United States, a few major players rewrote (or are attemping to rewrite) the playbook. After more than a year of talks, Catholic Health Initiatives and Dignity Health signed a definitive agreement in December to create a 139-hospital, $28.4 billion health system. Soon after came reports of St. Louis-based Ascension and Renton, Wash.-based Providence St. Joseph discussing a merger, which would result in a 191-hospital, $44.8 billion operation. Although both of these deals trail Oakland, Calif.-based Kaiser Permanente and its nearly $65 billion in revenue, they illustrate how the composition of nonprofit American health systems is continuing to change from local and regional entities to corporate national networks. For example, if Ascension and Providence combine, they will outsize the largest for-profit health system today — Nashville, Tenn.-based HCA Healthcare — which includes 177 hospitals in 20 states and Britain.

Executive’s takeaway: Executives may want to reevaluate the oft-spoken phrase “all healthcare is local” in light of 2017’s M&A activity. Hospitals will continue to serve as economic engines in their respective communities, but the organization of health systems is moving in a direction where they are viewed as ubiquitous brands as opposed to regional hubs for health. For example, San Francisco-based Dignity and Englewood, Colo.-based CHI are basing the corporate headquarters for their new enterprise in Chicago. Ascension and Providence would have footprints in 27 states if they merge.

5. Many health systems that were new players in the health plan business got out of it. Provider-sponsored health plans always carried a great amount of risk. Of the 37 health plans launched by hospitals and health systems since 2010, only four were found profitable in 2015, according to research published this past year by the Robert Wood Johnson Foundation. As major health insurers reduced their individual coverage options and rolled back from the public exchanges this year, we also saw several health systems decide to scale back or shut down their health plans. New Hyde Park, N.Y.-based Northwell Health shared plans in August to wind down its health insurance business, CareConnect, over the next year. Dayton, Ohio-based Premier Health is selling its health plan to Evolent Health, a Washington, D.C.-based value-based care platform. Louisville, Ky.-based Baptist Health plans to shut down its health plan operation in 2018. Late last year, Dallas-based Tenet Healthcare revealed plans to scale back its insurance business in 2017 after officials attributed lukewarm earnings to its health plan business.

Executive’s takeaway: When even the big five health insurers — so well-equipped with analytic tools, data, infrastructure, utilization management experience and risk analysis talent — have a difficult time accounting for risk, it is not surprising many green health systems made their move for the door this past year. This is not an opportune time for health systems with little experience managing risk to build or buy a health plan. 

6. Activist shareholders shook up legacy hospital operators. Board room issues within the major for-profit hospital operators are typically opaque, but 2017 brought a rash of investor-prompted activity that resulted in ousted CEOs, overhauled boards of directors, poison pills and new governance rules. Tenet Healthcare underwent significant change in 2017 under intense pressure from its largest shareholder, Glenview Capital Management. When two Tenet board members, both employed by Glenview, resigned over what they described as “irreconcilable differences,” they made it known that Glenview would possibly “evaluate other avenues” to be a constructive owner of Tenet on or after Sept. 1. By Aug. 31, Tenet announced it would replace CEO Trevor Fetter, “refresh” the composition of its board of directors and implement a short-term shareholder rights plan. Mr. Fetter resigned in October, before a successor was named, after 14 years with the system. In August, an investor in Franklin, Tenn.-based Community Health Systems called for the resignationof CEO Wayne Smith, who has led the 127-hospital system since 1997, over what the investor described as missteps in strategy resulting in financial trouble for the system. At this time, Mr. Smith still holds his job, but CHS may be bracing for more investor activity. Chinese billionaire Tianqiao Chen has gradually been ramping up his stock in the hospital operator since 2016. At time of publication, he holds nearly 23 percent of CHS stock. Finally, directors of HCA Healthcare made a change in late 2017 to allow established investors to participate in the board seat nomination process, a move made in response to an activist investor.

Executive’s takeaway: The fact that two of the largest U.S. for-profit hospital operators faced calls for CEO resignations in 2017 is part of a sweeping trend across industries in which activist investors start campaigns for change by targeting top management. Between January and May 2017, activist shareholders were responsible for ousting CEOs at three high-profile S&P 500 companies — American International Group, CSX and Arconic, according to The Wall Street Journal. Investors were attempting to oust six other CEOs in the same time frame. It’s worth noting that CEOs feel the heat at the launch of campaigns versus as a last resort. The WSJ characterized this trend as “a new level of aggressiveness for a group already known for its bold actions.” 

7. As the average health system C-suite grew, a few systems reduced administrative roles. While the number of practicing physicians in the U.S. grew 150 percent between 1975 and 2010, the number of healthcare administrators increased 3,200 percent in the same period. Yet in 2017, we saw a few major health systems go against the grain and not only lay off administrators, but eliminate their roles completely. In June, Houston-based MD Anderson Cancer Center eliminated executive vice president roles and gave senior vice presidents more focused areas of responsibility. Valley Medical Center, part of Seattle-based UW Medicine, got rid of the COO position in May, and Charleston, S.C.-based Roper St. Francis did the same in August. In December, San Diego-based Scripps Health shared plans to eliminate the CEO position in its four hospitals in favor of a regional CEO model. 

Executive’s takeaway: This past year contained several isolated incidents in which executive or administrative jobs were not immune from the financial pressures mounting on hospitals and health systems. There is reason to believe “right-sizing” (or at least reducing) administrative staffing at health systems will continue throughout 2018. Chris Van Gorder, president and CEO of Scripps Health, recently shared that layoffs at the system will likely include administrative and leadership roles while the system continues to hire caregivers. His reasoning, an excerpt of which follows, is applicable to many health systems today: “Healthcare is changing rapidly with huge growth in ambulatory care and reduced utilization of inpatient hospitals — and given the elimination of the individual mandate under the Affordable Care Act, the uninsured will once again be growing nationally. … We’ve got to shift our organizational structures around to be able to deal with the new world of healthcare delivery, find ways of lowering our costs significantly. If we don’t, we will not be able to compete.”

8. Healthcare and the government failed to effectively communicate. In 2017, the opportunities for the Trump administration, Congress and healthcare leaders to convene about healthcare legislation and policy came and went. CEOs from the five largest nonprofit health systems in the country took pen to paper, urging President Donald Trump and Congress to meet with them and exchange ideas. In the end, the closest thing we saw to healthcare reform in 2017 were bills — the American Health Care Act, Better Care Reconciliation Act of 2017 (or Skinny Repeal package), the Graham-Cassidy healthcare bill — that received significant opposition from major healthcare stakeholders, which are not historically liberal. Yet even an avalanche of nays from the American Medical Association, American Hospital Association, Federation of American Hospitals, American Psychiatric Association, Association of American Medical Colleges and several other groups did not sway Congress. All but three Republican Senators voted to pass the Skinny Repeal package, illustrating how the bipartisan nature of our political process is overriding expertise and informed lawmaking. 

Executive’s takeaway: A bipartisan approach is the most effective way when attempting to redesign a $3 trillion industry that influences life-or-death decisions. These efforts also require input from a variety of seasoned healthcare experts who can challenge ideas, anticipate repercussions and identify blind spots. This holds true no matter which party holds control of the White House, Congress or both. Although healthcare stakeholders and government officials did not productively connect in 2017, health system leaders must persist in their attempts to influence public policy and exercise greater creativity in their advocacy efforts. Strategies that worked in the past can no longer be counted on in 2018 and beyond. 

9. Fed up, nurses walked off the job. While nurses’ strikes are not a novel event, there is a reason many demanded wider attention and transcended local business news to become national headlines. The most noteworthy strike of the year took place July 12, when approximately 1,200 nurses at Boston-based Tufts Medical Center began a 24-hour strike — the first nursing strike Boston saw in 31 years. Roughly 120 miles from Boston, approximately 800 nurses at Berkshire Medical Center in Pittsfield, Mass., participated in a one-day strike in October. Across the country in California, nurses organized rallies and protests at more than 20 Kaiser Permanente sites to protest what they called inadequate staffing levels. In September, nurses and other hospital personnel unionized with SEIU walked off their jobs at Riverside University Health System – Medical Center in Moreno Valley, Calif., for three days. The county footed the $1.5 million bill for temporary replacement nurses for those 72 hours. Speaking of a bill, Minneapolis-based Allina Health tallied the costs of two 2016 strikes — one lasting six weeks — called by the Minnesota Nurses Association. The system put the figure in the ballpark of $149 million, which anchored Allina’s operating loss of $30 million for fiscal year 2016. 

Executive’s takeaway:  Although it is tempting to reduce labor strikes to events fueled by local market forces and politics, hospital and health system executives should pause and consider that striking nurses’ arguments — that they are expected to work demanding jobs with too few staff, resulting in unsafe conditions, high stress and burnout — is a description that applies to many, if not most, U.S. hospitals. Gender dynamics may also yield greater influence on administrator-nurse affairs in the coming year. As the nation comes to terms with troubling events that went unaddressed after women’s claims and voices were not met with the attention they deserved, health system executive teams are wise to change the approach taken in years past and pay closer attention to the female-dominated field of nursing. As one representative with the MNA told The Nation: “[Management is] a male institution thinking they can snub 1,200 women and pretend their opinions about healthcare don’t count.”

10. The year healthcare became very, extremely, incredibly difficult. Was any component of healthcare ever easy? Those who have spent years in the industry would say no. Yet 2017 was the year in which officials and lawmakers reminded the American public that healthcare is complicated. While true, this narrative functioned as a sound bite to normalize Congressional dysfunction. 

Executive’s takeaway: What’s concerning here is whether this throwaway statement will make its way from Capitol Hill to hospital board rooms, executive offices, clinician lounges and medical school lecture halls and, over time, nurture a climate that fosters and condones inaction. It is unproductive to constantly point out the complicated nature of healthcare and/or bask in this acknowledgement. To do so is not the behavior of an effective leader. It goes without saying that healthcare is complicated. Healthcare is also necessary, expensive, life-saving, honorable, slow, inaccessible, urgent, flawed, and never going away. What are you doing to make it better? 

Nursing named most trusted profession for 16th consecutive year

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

https://www.beckershospitalreview.com/human-capital-and-risk/nursing-named-most-trusted-profession-for-16th-consecutive-year.html

Image result for 16 straight years most trusted profession

Nurses are the most trusted professionals in the United States, according to the 2017 edition of Gallup’s annual poll. The poll marks the 16th consecutive year nursing topped the list as the most honest and ethical profession.

For the 2017 poll, Gallup asked a random sample of 1,049 U.S. adults to rate honesty and ethical standards for 22 occupations. The respondents selected ratings of very high/high, very low/low or average.

Healthcare providers took three spots in the top five most trusted professions, with a high percentage of respondents rating their honesty and ethical standards as very high or high. They are listed below along with their rank:

  • Nurses (1) — 82 percent rated honesty and ethical standards very high or high
  • Medical doctors (4) — 65 percent
  • Pharmacists (5) — 62 percent

Since Gallup first included nurses in the survey in 1999, respondents have ranked the frontline providers as the most trusted profession in all but one year. In 2001, firefighters topped the list after Gallup included the profession in the poll in the wake of 9/11.

“Nurses provide much more than bedside care,” said Pamela Cipriano, PhD, RN, president of the American Nurses Association, in an emailed release. “We advocate for patients, deliver primary care, meet the complex needs of patients with chronic conditions, volunteer for disaster relief efforts, and are a trusted voice in boardrooms across the country.”

 

8 health systems with strong finances

Posted on by • Posted in Uncategorized • Tagged , , , , , , • Leave a comment

https://www.beckershospitalreview.com/finance/8-health-systems-with-strong-finances-122117.html

Here are eight health systems with strong operational metrics and solid financial positions, according to recent reports from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.

Note: This is not an exhaustive list. Health system names were compiled from recent credit rating reports and are listed in alphabetical order.

1. Lincoln, Neb.-based Bryan Health has an “AA-” rating and stable outlook with Fitch. The system has a strong market position, healthy balance sheet metrics and growing patient volume, according to Fitch.

2. Mercy Health in Cincinnati has an “Aa3” rating and stable outlook with Moody’s and an “AA-” rating and stable outlook with S&P. The health system has solid debt service coverage and strong balance sheet metrics, according to Moody’s.

3. Chicago-based Northwestern Memorial HealthCare has an “Aa2” rating and stable outlook with Moody’s. The system has a prominent and growing market position in the Chicago region, a strong investment position, good margins and manageable leverage, according to Moody’s.

4. San Diego-based Sharp HealthCare has an “Aa3” rating and stable outlook with Moody’s. The system has strong balance sheet measures and a fundamentally stable and strong strategic position, according to Moody’s.

5. Stanford (Calif.) Health Care has an “Aa3” rating and stable outlook with Moody’s. The system has a strong market position as one of two major academic medical centers in the Bay Area, a reputation for clinical excellence and research, and is in a service area with strong population growth and high wealth levels, according to Moody’s.

6. Iowa City-based University of Iowa Hospitals & Clinics has an “Aa2” rating and stable outlook with Moody’s. The health system has a broad market with growing patient volumes and geographic reach for its high-acuity services, according to Moody’s.

7. Philadelphia-based University of Pennsylvania Health System has an “Aa3” rating and stable outlook with Moody’s. The system has a strong and growing market position, good liquidity, and a history of beating budgets and managing capital spending relative to operating performance, according to Moody’s.

8. Yale New Haven (Conn.) Health System has an “Aa3” rating and stable outlook with Moody’s. The system has a leading market position in Connecticut, solid liquidity, moderate capital needs and manageable leverage, according to Moody’s.

The Pennsylvania health care battle

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , • Leave a comment

https://www.axios.com/the-pennsylvania-health-care-battle-2519142732.html

Image result for The Pennsylvania health care battle

Highmark Health, a powerful Blue Cross Blue Shield insurer that also owns a hospital network in Pennsylvania, and academic system Penn State Health signed an agreement last week to build a health care network in central Pennsylvania.

The deal sounds like a merger, but it’s not. It also adds another layer to the turf war between Highmark and UPMC — the two have feuded for years, and UPMC recently embarked on a hospital buying spree. I spoke with executives from Highmark and Penn State to explain what their deal is and why it matters.

The details: Highmark and Penn State Health are investing $1 billion to build out a network of doctors and health care facilities, but the organizations aren’t disclosing how much each side is contributing. Penn State Health CEO Craig Hillemeier said the deal is a strategic partnership, not a merger of assets. Here’s a condensed version of the conversation:

You all are talking a lot about “value-based care.” But what will you do specifically to fulfill the promise that this deal will lower health care costs for people in your region?

Highmark CEO David Holmberg: “This is about making sure that we design insurance products so that when a member has to make a decision, they have access to care near where they live. (Penn State’s academic medical center) is also more affordable and more effective than many of the other academic systems.”

So how much did UPMC play into this? UPMC has bought a lot of hospitals this year, and I have to imagine that name came up multiple times in discussions.

Penn State Health CFO Steve Massini: “We’ve had a strategy for a number of years to build out this community-based network and support the academic center. We felt that having an insurance partner like Highmark was a very valuable piece of that strategy … what others do is not what we tend to get hung up on.”

Holmberg: “We’re in this for the long term. We’re not going to worry about what the other guys do.”

Will you create health plans that, for example, have cheaper premiums but limited networks where people can only go to Penn State doctors and hospitals?

Highmark President Deborah Rice-Johnson: “We have those in the market today. It’s not new to the industry. We’ll still have broad-network products … but we have absolutely seen premiums and care costs moderate very differently (in limited-network plans) than the broad-network products.”

Can you guarantee that premiums for those types of narrow plans won’t rise faster than the rate of inflation?

Rice-Johnson: “We have done that, yes.” But employers need to sign multiyear agreements with Highmark to get those capped rates.

 

Still no deal as UNC Health Care and Carolinas HealthCare continue secret talks

Posted on by • Posted in Uncategorized • Tagged , , , , , , • Leave a comment

http://www.newsobserver.com/news/business/article191010834.html

Image result for Still no deal as UNC Health Care and Carolinas HealthCare continue secret talks

A UNC special committee missed its first deadline to review whether a proposed partnership between UNC Health Care System and Carolinas HealthCare would be good for the residents of North Carolina.

The UNC system’s Board of Governors formed the special committee in November to review the mega-deal that would transform the state’s health care landscape and raise questions about the future operations of UNC Health Care System and UNC’s School of Medicine, which are owned by the state. The special committee had planned to meet as often as necessary to complete its review by Wednesday and previously conducted several meetings in closed session.

As of Wednesday, however, Chapel Hill-based UNC and Charlotte-based Carolinas had not submitted a proposed business agreement for the special committee to review. The sensitive negotiations are being conducted in utmost secrecy.

“We hope we can finalize deal terms by the end of the first quarter of 2018,” UNC Health Care spokesman Phil Bridges said by email. “This is a complicated deal, and we are taking our time to get things right for both entities.

“We understand, however, that the Board of Governors’ special committee has adjusted its deadline to complete the review by the end of January,” he said. “We are not behind schedule.”

The hospital partnership, proposed in August, would create one of the largest health care systems and academic research centers in the country, with more than 50 hospitals and 90,000 employees. The two organizations say that legally it would not be a merger because they would not transfer assets out of the state’s control.

The joint operating company would be overseen by an independent board of directors whose members would be nominated by Carolinas HealthCare and by UNC Health Care. Bill Roper, CEO of UNC Health Care, would be the executive chairman of the new independent board; Gene Woods, CEO of Carolinas HealthCare, would be CEO of the new joint operating company.

UNC spokesman Joshua Ellis was unable to provide answers on Wednesday about the status of the negotiations.

This month, the special committee hired Texas health care attorney Jerry Bell Jr. to help vet the proposed joint operating company. Bell represents hospitals, academic medical centers, medical schools and other health care networks on a wide variety of matters, including mergers and acquisitions, business transactions, as well as federal and state regulatory issues.

It’s unclear what authority UNC’s Board of Governors has to review, or potentially to block, the formation of the proposed joint operating committee if it were to conclude that the proposed arrangement would harm the UNC Health Care System and UNC’s medical school. Roper has said the decision on whether to combine with Carolinas rests with UNC Health Care System’s board of directors, of which he is a member.

But the formation of the special committee by UNC’s Board of Governors suggests they expect to play some role. Under state law, the UNC Health Care System reports to the Board of Governors, which appoints the system’s CEO and half of the 24 members of its board of directors. But the UNC Board of Governors would not have direct control of the independent board that would oversee the UNC-Carolinas joint operating company.

The special committee’s members come from UNC’s Board of Governors: auto parts magnate O. Temple Sloan III; health care attorney Carolyn Coward; Leo Daughtry, a Smithfield lawyer and former longtime state lawmaker; Doyle Parrish, founder of Summit Hospitality Group, a hotel management business in Raleigh; Randall Ramsey, founder and president of Jarrett Bay Boatworks in Beaufort; and corporate lawyer W. Louis Bissette Jr.

Because the details of the proposal are not known, the partnership has evoked only general concerns over higher health care prices. Such worries are typical when hospitals consolidate because giant hospital networks have more leverage in negotiating higher reimbursement rates from health insurance companies. The insurers pass on those higher costs to their customers.

North Carolina’s attorney general Josh Stein has said he is examining whether the proposed deal would harm health care competition in the state, but state lawmakers have largely been silent on the issue.

After the deal was announced at the end of August, Republican state Sen. Jeff Tarte expressed concerns that the partnership was the prelude to a full merger that would one day leave UNC Health Care owned by the larger Carolinas HealthCare. But earlier this month, Tarte, a retired health care business consultant from Cornelius, said the issue is not a topic of discussion among lawmakers, unless “it’s very high up and only a few people” are involved.

When asked if the legislature will review the deal, N.C. Senate President Pro Tem Phil Berger’s press secretary, Amy Auth, emailed: “We’d prefer not to put the cart before the horse.”

 

Is M&A the Cure for a Failing Health Care System?

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , • Leave a comment

https://hbr.org/2017/12/is-ma-the-cure-for-a-failing-health-care-system

Image result for Is M&A the Cure for a Failing Health Care System?

The U.S. health care system is begging for disruption. It costs way too much ($3.3 trillion last year) and delivers too little value. Hundreds of millions of Germans, French, English, Scandinavians, Dutch, Danish, Swiss, Canadians, New Zealanders, and Australians get comparable or better health services for half of what we pay. For most Americans, care is not only expensive but is also fragmented, inconvenient, and physically inaccessible, especially to the sickest and frailest among us.

It should come as no surprise, then, that when titans of our private, for-profit health care sector — like Aetna, CVS, UnitedHealth Group (UHG), and DaVita — strike out in new directions, stakeholders react with fascination and excitement. Could this be it? Is free-market magic finally bringing Amazon-style convenience, quality, and efficiency to health care? Are old-guard institutions, like hospitals and nursing homes, on the verge of extinction?

The answer, frustratingly, is that it depends. It depends above all on the results. To be the change that many desire, these new mergers and acquisitions, and the others that will likely follow, must produce a higher-quality product for consumers (and satisfy physicians and other health professionals) at an affordable price. The details are crucial, and the details in health care — as our political leaders have recently learned — are complicated.

Even a high level look at two apparently similar deals suggests the importance of getting under the hoods of these arrangements. Both CVS’s planned $69 billion acquisition of Aetna and UnitedHealth’s $4.9 billion deal to buy DaVita Medical Group, bring together a very large national insurer and a large provider of health care services. Combining an insurance function with a delivery system has ample precedent in health care. Some of the nation’s most innovative, high-performing non-profit health care organizations use this formula.  These include the Kaiser Health Plans, Intermountain Healthcare in Utah and Idaho, the Geisinger System in Pennsylvania, the Henry Ford Health System in Detroit, and HealthPartners in Minnesota and Wisconsin, among others.

The reason this formula works is that when care-delivery systems also act as insurers, they assume financial responsibility for the care they provide. This tends to focus doctors, nurses, and other health professionals on the value of what they do — finding the most cost-effective approach to managing their patients’ problems. The result can be a culture of economy and quality that is very hard to replicate in the prevailing fee-for-service environment, where health professionals get rewarded for the volume rather than the value of services.

So the big question is whether these bold new combinations of insurer and provider can generate promising partnerships similar to a Kaiser or an Intermountain, or find some other equally powerful formula for disruption. The answer is far from certain, and the uncertainties differ for the two mergers.

In the CVS-Aetna case, the care provider, a pharmaceutical retailer and pharmaceutical benefit manager, provides a very limited set of health services: drugs, drug purchasing, and selected, basic, routinized primary care at more than 1,100 local Minute Clinics  located in communities around the United States. To become a Geisinger or an Intermountain equivalent, Aetna-CVS would have to acquire — or develop — seamless relationships with legions of primary care and specialty physicians and hospitals. It would have to turn its stores into medical clinics, with exam rooms, diagnostic laboratories, and x-ray suites. And it would have to install and link electronic health records with other providers in its communities. Having done all this, CVS would have to excel at the very challenging task of managing physicians and other health professionals — something that daily confounds even the most experienced, long-time, care-delivery systems. The challenge would be unprecedented, the expense considerable, and the outcome uncertain.

The CVS-Aetna partnership seems likely, instead, to set off in a very different, and intriguing, direction: offering an augmented suite of preventive and population health services for high-cost chronically-ill patients through its convenient, community-based outlets. CVS staff will serve as local case managers and coordinators for patients who might otherwise skip needed preventive services, have trouble getting to their primary care physicians’ offices, or just need help taking their medicines. The hope is that this will reduce patients’ use of more expensive emergency, hospital, and specialty services, thereby reducing Aetna’s bills and making its product more competitive. Aetna would incent its clients to use CVS services by exempting these from the normal deductibles and copays that most insurers charge, thus incidentally, increasing CVS’s business more generally. This strategy could attract customers to both CVS and Aetna, add health care value, and even drive up profits.

But uncertainties remain. In addition to those I’ve mentioned, one of the biggest challenges will be coordinating with traditional care providers, both primary care and specialists. Seamless teamwork is critical to effective care of complex, high-cost patients. And by adding another player to our already-fragmented health care system, the CVS-Aetna project could actually undermine coordination of services. And while better care for complex patients is clearly part of the solution to our cost and quality problems, it may not be the systemic disruption that some are hoping for.

The UnitedHealth-DaVita deal, in contrast, seems more likely at first glance to accomplish the insurer-provider partnership that has characterized Kaiser-style organizations in the past. The DaVita Medical group employs 2,000 primary care and specialist physicians in nearly 300 medical clinics, 35 urgent-care centers, and six outpatient surgery centers in six states. Among the group’s divisions is the formerly independent HealthCare Partners, which, as this Commonwealth Fund case study makes clear, has a long history of accepting and managing financial risk, using advanced information systems, and promoting quality-improvement programs.

That said, no one should underestimate the challenge of growing the UnitedHealth acquisition of dispersed physician groups into a national system capable of disrupting our floundering health system. Health care is a very local affair, and the organizations providing it tend to be creatures of their localities and histories. It can take generations for a provider-insurer partnership to develop a culture of trust, collaboration, and value orientation that has made existing examples of these combinations so uniquely effective. If the new entity seeks to grow, it will find that recruiting and training physicians who can leave the fee-for-service mentality behind is a challenge, as is finding leadership that can gain and keep health professionals’ trust. Kaiser has failed in several attempts to spread to new locations. And though UnitedHealth’s Optum division, which will run the partnership, has some limited experience managing selected specialty health services, making this new enterprise work could prove daunting.

Even if the Aetna-CVS and UnitedHealth-DaVita ventures contain the seeds of transformative health system change, it will take time for those seeds to germinate. But Wall Street is not a patient audience. The involved companies will face short-term pressure to prove the profitability of the new arrangements. From this standpoint, it does not bode well that DaVita was anxious to sell its medical groups because they were not performing financially.

The excitement about these two bold new health care arrangements says as much about the desperation with our current health care systems as it does about the promise of the mergers themselves. They may have compelling short-term business value to shareholders — though that, too, remains to be proven. As fundamental health care disrupters, however, they face challenging and uncertain futures.

 

Tax bill has major downside for heavily indebted healthcare companies

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , • Leave a comment

https://www.beckershospitalreview.com/finance/tax-bill-has-major-downside-for-heavily-indebted-healthcare-companies.html

Image result for declining money

The Republicans’ tax overhaul plan, which is expected to become law soon, will cause many healthcare organizations to reassess their debt levels.

The tax bill will limit the tax deduction companies take for the interest they pay on their debt to 30 percent of earnings before interest, taxes, depreciation and amortization. This change will put pressure on healthcare companies with heavy debt loads. In 2022, interest expense deductions would be further reduced, which could cause companies’ tax bills to increase further, according to The Wall Street Journal.

Franklin, Tenn.-based Community Health Systems and Dallas-based Tenet Healthcare, which carry about $14 billion and $15 billion of debt, respectively, could be negatively affected by the tax bill’s limit on interest expense deductions. On Tuesday, Tenet said it expects the change to lower its 2018 earnings forecast, according to the report.

In a report issued earlier this month, Moody’s Investors Service said many speculative-grade companies across several sectors, including healthcare, would be negatively affected if deductibility were limited.